Taxation measures

 

Govt proposes taxation measures to fetch additional Rs. 69 billion revenue in FY 2009-10

ISLAMABAD, Jun 13 (APP): The government on Saturday proposed some new taxation measures in the form of excise duty, withholding tax, value added tax, capital value tax etc. on various goods and services, which will bring an additional estimated Rs. 69 billion revenue to national exchequer in the fiscal year 2009-10.

Minister of State for Finance and Economic Affairs Ms. Hina Rabbani Khar while presenting the budgetary proposals for FY 2009-10 said the tax measures being proposed by the government are fair and equitable, guided by the principle of “ability to pay”, set in the context of an economy fighting a war.

She said the excise duty on petroleum products is being levied in the shape of a carbon surcharge which would eliminate the existing petroleum development levy.

This would ensure transparency in the pricing of petroleum products, curb consumption, save foreign exchange and reduce carbon emissions, she added.

In order to discourage consumption of cigarettes, the State Minister for Finance said, excise duty and sales tax on cigarettes is proposed to be enhanced, adding, this would generate estimated revenues of Rs 15 billion.

Ms. Hina Rabbani Khar said as a revenue measure and to broaden the tax base, FED in VAT mode is proposed to be levied on the additional services including: Fees charged by banking services;

Fees charged by import cargo handlers; Fees charged by stock brokers; Fees charged by insurance companies; and Fees charged by electronic media for advertisements.

The estimated revenue impact of these measures is Rs 16 billion, she added.

The State Minister said that it is proposed to enhance the rate of withholding tax on imports of commercial nature from 2% to 4%. This measure would result in estimated revenue of Rs 23 billion.

Following the policy of broadening the tax base and putting the burden on those who can bear it, Ms. Khar said, it is proposed to enhance the rate of Capital Value Tax on property from 2 to 4 percent.

The Government intends to adopt effective measures to ensure its collection. It is estimated to generate revenues of Rs 15 billion, she added.

The State Minister said, to help the internally displaced persons, it is proposed to levy for a single year: a nominal tax of 5% on the tax payable by every individual deriving income above Rs one million.

It is further proposed to levy a flat rate of 30% on bonuses earned by individuals in the corporate sector drawing salary exceeding Rs one million, she added.

The State Minister said, it is proposed to levy a Minimum Tax under Section 113 of the Income Tax Ordinance 2001 on the income of a resident company, provided that this will not be applicable to a company which has declared gross loss before set off of depreciation and other inadmissible expenses under the Ordinance.

To promote documentation of the economy, it is proposed that certain sectors may be pulled out of the presumptive, or final, tax regime. These sectors will now be required to file returns. Phasing out the presumptive tax regime will be an on going process, she added.

Ms. Hina Rabbani Khar said what the nation and the people need now is a guarantee for permanence in policy, permanence in ideology and permanence in approach which cannot be found in elusiveness.

“Our power is the power of the people. Our founding father, Quaid-e-Azam, Mohammed Ali Jinnah pledged that Pakistan would have a government and a constitution chosen by the people. Mankind has reached great heights by pursuing democratic ideals. Democracy is our polity and all power belongs to the people”.

The Minister said Pakistan is a rich country in terms of both natural and human resources, adding, however, Pakistan has not fully exploited its potential.

In this scenario, she said, the government will ensure that clearer priorities and pro-poor sectoral programmes are in place that will provide an appropriate strategic framework to effectively reduce poverty.

“Let us welcome the sound of bells of another year which is likely to bring more hope for all than the one that has ended. Time and with it events are moving faster. But as a new page is being turned in an old book, let us end on a hopeful note”, she said.